You will have to prepare an 1120 tax return for the parent corporation,
one 1120 tax return for each of the subsidiaries, and
one 1120 consolidated tax return with a form 851 and a Schedule M-3 in it.
Each subsidiary and the parent must have all the forms required in their tax return, including an M-3, if applicable.
Adjustments and Eliminations returns are optional, and have to be entered as a separate return, with a fantasy name and EIN, such as "Company Eliminations", EIN "54-0000050." Please write to help@taxsoftware.com if you need us to assign a bogus EIN for your Eliminations return.
8) Then go to the bottom of the screen and make the choices for parent or subsidiary
9) Click on NEXT and continue and complete all the pages on the return; prepare a return for each of the companies.
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See more detailed examples below:
Hide'N'Such is the Parent company, so we have a return for the parent, showing as an 1120, and a consolidated return with the same EIN, showing as an 851.
Greek Playhouse and ACME Foods are subsidiary returns.
PARENT RETURN
We will start by entering the company's EIN, name and address on the very first page, and then selecting the type of return at the bottom of the page.
On the second page, the parent return we may or may not need a Schedule M-3 selected on this page.
At the bottom of the page we will check the box for Parent return, as shown.
The rest of the return will be entered as a regular return, by paging through all the pages and answering all the appropriate questions.
SUBSIDIARY RETURN
For each subsidiary the return will start the same way as the parent return, but the selection at the bottom of the second screen will for subsidiary and the EIN of the parent will be entered in the box, as shown.
The rest of the return will be entered as a regular return, by paging through all the pages and answering all the appropriate questions.
CONSOLIDATED RETURN
For the consolidated tax return, just make sure to also enter a Form 851 and a Schedule M-3. To get to form 851, please use the drop down box at the top of the page and select form 851. You can do the same procedure to get to Schedule M-3.
There will be no entry at the bottom of the screen.
ADJUSTMENTS AND ELIMINATIONS RETURNS
Adjustments and Eliminations returns are optional and must be entered with made ID. Please see the example below.
Select form 1120 and the tax year and click NEXT to get to the second screen.
Page through the return to enter all the information you need.
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If you enter all the types of returns mentioned above, at the end your START screen will look like this:
Each tax return has to be e-filed separately. File the subsidiaries and Eliminations first, then the parent, and then the consolidated.
